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City Meets Vineyard

Two global crises forced City Winery’s Michael Dorf to rethink his business model at critical moments. He found success and sustainability on the other side of both.

Photo courtesy of City Winery

“Whether it’s caused by the fires or the drought in California, our relationships with the farmers are continually being affected by climate change. There’s no question that climate change has affected the number of [City Winery] closings in Nashville and Atlanta in the last couple of years because of weather-related issues like flooding. And, just across the board, we’re seeing it affect our business.”

In 2008, Michael Dorf was getting ready to launch a new business. The founder and former owner of The Knitting Factory was about to introduce an elevated entertainment experience to New York City—a luxury concert environment built around wine and winemaking. Customers would be able to have the whole winemaking experience in his new venue alongside his Chief Winemaker David Lecomte and create their own unique barrel of wine. It was an experience that Dorf had had himself with rockstar winemaker David Tate in Napa several years before and one that he wanted others to enjoy. The day that the first shipment of grapes arrived at City Winery, Lehman Brothers declared bankruptcy, and everything changed. Customers who had signed up were no longer interested in paying $13,000 to make their own barrel of wine.

By the Spring of 2009, the wine they’d made from the world-class Pinot Noir and Cabernet grapes they’d purchased started aging beautifully in the barrels. While doing a barrel tasting, Dorf knew they had to sell the wine because it was ready (and it was so good!), but there were more challenges—bottle approval, getting a bottle line in the winery, corking, and labeling. At Chief Winemaker David Lecomte’s suggestion, they decided to put the wine from the barrels into stainless steel kegs and set up a tap system. From necessity came invention; somewhat accidentally, they’d found a green solution to winemaking.

Today, 75 percent of the wine served at City Winery locations never goes into a bottle. The wine is served by the glass, and this year, they’ll do 2 million glasses of wine which translates into 40,000 cases of wine not going into glass bottles. That efficiency, from barrel to stainless keg to glass, dramatically reduces the environmental impact that shipping would have if City Winery was bottling every barrel of wine.

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“There might be truckloads of glass that don’t have to be moved from Germany or from Mexico, where glass generally comes from. So, you think about all the savings there and what happens after you fill a bottle. Not having to use a bottle and literally go straight from the barrel to a stainless steel keg, right into a glass, and into someone’s bloodstream. The buzzword in wine is DTC—direct to consumer. You know, there’s no more efficient, environmentally friendly way to go DTC than right into a glass that the customer consumes.”

Dorf didn’t set out to be an environmentalist. His early decisions were mostly about efficiency, which, by default, helped the environment. But along the way, adopting a sustainable approach to business was the right thing to do and made the most business sense.

City Winery banned plastic in their venues years ago and installed water refill stations, which visiting artists use with refillable water bottles that they can also keep as a gift. The concept of a refilling station also inspired a unique expansion idea. Dorf asked himself if 75 percent of the wine served onsite never goes into a bottle, what could they do about the other 25 percent? The answer? Open a wine refill station in Grand Central Station.

Launching this October, customers can pick up a bottle of wine at City Winery Grand Central, then return the bottle for a $5 credit (and get a new bottle). The returned bottles are then washed, refilled, resealed, and returned to the shelf for sale.

“The most important component of the reusability idea was – what is the incentive for someone to actually return the bottle? Europe’s a little ahead of the U.S. in terms of recycling. In America, $0.05 is the incentive to return a bottle, plastic, or a can. 5 cents. That’s what it’s been since the seventies. That’s not a lot of incentive for most people. It’s not going to foster programs. So, we are doing a $5 return program. Every bottle that you return, you get a $5 credit. It’s a high incentive to not leave that bottle on the train or throw it away.”

Customers can return the bottles to any City Winery location, as each one has the ability to be a refill station. Dorf says they’re trying to think creatively about expanding the program to reach more people and believes there are wholesale opportunities with brands like Whole Foods.

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“The key is this $5 return value. That’s a game changer. So, who knows? Maybe we’ll get a lot of attention for what we’re trying to do. And it will, in turn, spur some of the larger corporations to follow suit. We feel that we’ve done almost everything we can on-premises to “drink green,” as we like to say. And now this is our way to do something for the off-premises side, which has always been more challenging.”

In 2020, they moved most of their winemaking to the town of Montgomery, NY. The site was an old mill, which was painstakingly restored in the middle of the pandemic. They also inherited a dam with hydroelectric power. The dam now provides 100 percent of the electricity used on-premise.

Even better, they can sell the surplus back to Central Hudson Gas & Electric, making the business more than net zero. Dorf is taking that model to other City Winery locations by using solar power to achieve net zero on all electrical use, including another Hudson Valley location that will be 100 percent powered by solar.

City Winery buys grapes from 35 world-class vineyards, mainly from California. The Pinot Noir and Chardonnay grapes come from Willamette Valley in Oregon, one of the best Pinot Noir terroirs in the world. They also get grapes from the Finger Lakes region in New York and some unexpected locations such as Michigan.

Photo courtesy of City Winery

“The location becomes really important. So, we get to go to the best terroir or locations to buy our grapes, ship them to all of the city winery locations, and get the wine right where the consumption happens. So, we just kind of inverted the model a little bit. In these days of technology and the ability to ship and put tracks in trucks and maintain a stable 36-degree temperature from the moment we unpack the trucks, we can sustain the fermentation time with no loss at all to the quality of the fruit.”

Dorf is bullish about providing an authentic winery experience to customers, so every City Winery location is a bonded winery. And along with bigger locations like New York, he’s building a network of micro wineries in places like St Louis, Columbus, Detroit, and Pittsburgh. The choice of locations was a combination of things—all are underserved in terms of a modern, high-end music experience and, when viewed on a map, make sense logistically. The cities create a perfect route for an artist on tour who is moving between New York, Chicago, and Nashville.

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“For me, one of the greatest compliments I get—and it goes into the decision-making— is when a musician says to me: ‘I love City Wineries. You guys have built a better stage. You’ve got great food. Backstage is incredible. The audience loves seeing me in this location. Gosh, if you could only be in Toronto. I need a place in Toronto. I need a place in Milwaukee. I have an audience there, but I don’t have a place to play. If you could only open there.’ I love hearing that and I have been taking notes for ten years now of all of the markets we’re going into next. They all have a lot of people saying, boy, I wish you could open here. And so that’s part of the science behind the madness.”

What’s next? International expansion. Toronto is on the list, as is London. And in each location, Dorf and his team will source locally and bring their green business innovation.

“One would think that eventually there’ll be a critical mass of people who recognize that we need to be at least carbon neutral, if not carbon negative. Now is the time. I want to move as fast as we can. I would like to grow what we’re doing from a winemaking standpoint and a celebration of life. We might not be fully saving the planet ourselves, but we have a role in bringing joy to people on a nightly basis, everywhere we are. We haven’t lost sight of that just because we want to be green and environmentally sensitive. We want people to have a really good time. We want people to immerse themselves fully and indulge their sensory experience when they set foot in City Winery and, hopefully, how they live the rest of their lives. And if climate consciousness is part of that, fantastic.”

Michael Dorf is the founder and CEO of City Winery and the author of Indulge Your Senses: Scaling Intimacy in a Digital World. 

Hear Michael Dorf speak at the Health + Wealth of Our Planet: The Business of Fighting Climate Change event on Tuesday, September 20th at City Winery in NYC. Register here.

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